ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into this 27th
day of May, 1998 by and between TD WINDOWS, INC. (the "Buyer"), a Kentucky
corporation, and ALLHOM EAGLE WINDOWS & DOORS, INC. (the "Seller"), a Kentucky
corporation.
PRELIMINARY STATEMENTS:
The Seller is engaged in the business of designing, manufacturing,
selling and installing vinyl replacement windows for existing homes;
The Seller desires to sell or otherwise transfer certain of its assets;
and
The Buyer desires to purchase the assets.
In consideration of these preliminary statements and the mutual
covenants, representations, warranties and agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.1 Transfer of Assets.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as hereinafter defined) the
Seller shall transfer to the Buyer, free and clear of all claims, charges,
liens, contracts, rights, options, security interests, mortgages,
encumbrances and restrictions whatsoever (collectively, "Claims"), all of the
assets, properties and rights owned by the Seller or in which the Seller has
any right or interest of every type and description, real, personal and
mixed, tangible and intangible, confirmed or contingent (other than the
Excluded Assets as hereinafter defined), including, without limitation,
business agreements, property, Inventory (as defined in Section 2.28), the
Accounts Receivable (as defined in Section 2.29), supplier lists, customer
lists, prepaid insurance, licenses and permits, processes, service marks,
know-how, show-how, trade secrets, software (including, without limitation,
documentation and related source and object codes), licenses thereto,
computers and computer equipment, files and other records, systems and
processes, security deposits, contracts, arrangements and understandings,
oral and written, formal and informal, for work to be performed and/or
services to be provided, real estate and interests therein, leasehold and
other improvements, machines, machinery, equipment, furniture, fixtures,
supplies, all rights and claims under insurance policies and other contracts
of whatever nature, all causes of action,
claims and demands of every nature relating to the Assumed Liabilities,
Contracts and Leases (as hereinafter defined), and all other assets,
properties and rights of every kind and nature owned by the Seller, whether
or not specifically referred to in this Agreement (collectively, the
"Transferred Assets").
(b) Notwithstanding any provision of this Agreement to
the contrary, there shall be excluded from the Transferred Assets and
retained by the Seller the following assets (the "Excluded Assets"): (i) all
cash on hand and in banks (including all uncollected items); (ii) all other
claims for services provided to customers prior to the Effective Time; (iii)
trademark, patent rights and assets relating to GREATTRIM; and (iv) all
contracts, arrangements and understandings which are not capable of being
transferred or assigned without the approval or consent of any party thereto
other than the Seller if such approval or consent has not been obtained,
subject, however, to Sections 1.3 and 5.1 herein.
(c) The Seller shall transfer the Transferred Assets to
the Buyer pursuant to a Xxxx of Sale, Assignment and Assumption Agreement in
substantially the form of Exhibit A, a Lease Assignment and Assumption
Agreement in substantially the form of Exhibit B, and such other documents
and instruments as the Buyer or its counsel may reasonably request.
(d) At any time and from time to time after the Closing
Date, at the request of the Buyer and without further consideration, the
Seller shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation as may be reasonably requested in
order to more effectively transfer, convey and assign to the Buyer and to
confirm the Buyer's title to the Transferred Assets.
SECTION 1.2 Consideration for the Transferred Assets. In consideration
for the transfer of the Transferred Assets, upon the terms and subject to the
conditions set forth in this Agreement, the Buyer shall assume the Assumed
Liabilities pursuant to Section 1.3 hereof and shall make payments as follows:
(a) Closing Payment. An initial payment of the sum of
$276,600.85 less the total amount set forth on Schedule 2.30 (the "Hold-back
Amount" in cash on the Closing Date (defined below) by certified check. Any
portion of the Hold-back Amount against which no right to reclaim has been
asserted against the Buyer nor notice of any right to reclaim has been
received by the Buyer, as provided in Section 355.2-702(2) of the Kentucky
Revised Statutes ("KRS"), shall be paid to the Seller eleven (11) days after
the Closing Date.
(b) Post Closing Payment. A second payment of Twenty
Thousand Dollars ($20,000), plus interest, payable at the earlier of (i) when
all Accounts Receivable as set forth on Schedule 2.29 are collected in full
or (ii) one year after the Closing Date. This amount shall be represented by
a promissory note of the Buyer's parent payable to the Seller and bearing
interest at the minimum applicable federal rate, as prescribed by the
Internal Revenue Code of 1986, as amended (the "Code") necessary to avoid
interest being imputed at a higher rate, the form of which is attached hereto
as Exhibit C.
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SECTION 1.3 Assumption of Liabilities. The only obligations and
liabilities to be assumed by the Buyer in connection with its acquisition of
the Transferred Assets (the "Assumed Liabilities") are the obligations and
liabilities specifically listed on Schedule 1.3 and obligations and
liabilities arising from the operation of the Seller's business after the
Effective Date, including obligations under executory contracts listed on
Schedule 1.3 arising from the operation of the Seller's business after the
Effective Date (provided such contracts are not in default and are assigned
in writing by the Seller with the written consent of the other party or
parties thereto, if necessary, and are delivered to the Buyer on or prior to
the Effective Date).
The Buyer shall assume such obligations and liabilities pursuant to the
Xxxx of Sale, Assignment and Assumption Agreement substantially in the form
of Exhibit A and the Lease Assignment and Assumption Agreement substantially
in the form of Exhibit B. The Seller shall remain liable for the payment of
all other liabilities and obligations which accrue prior or subsequent to the
Effective Date. Except for the Assumed Liabilities in the amount and to the
extent provided in this Section 1.3, the Buyer shall not assume or be
responsible for any other liabilities or obligations which relate in any
manner to the operation of the Seller's business prior to the Effective Date,
and the Seller shall indemnify, defend, and hold the Buyer harmless from all
of such obligations and liabilities as set forth in Section 9.2 below.
Operating expenses, including without limitation rent payable under real
estate and equipment leases, staff commissions and holiday pay and rebates to
customers for which bills are received or payment became due after the
Effective Date with respect to periods both prior to and after the Effective
Date will be allocated to each of the Seller and the Buyer on a pro-rata
basis according to the ratio of pre-Effective Time days to post-Effective
Time days; promptly upon receipt of notice from the Buyer of amounts so
allocated to the Seller, the Seller shall remit full payment therefor to the
Buyer.
SECTION 1.4 Allocation of Purchase Price. The considerations
paid and the liabilities assumed by the Buyer pursuant to Sections 1.2 and
1.3 above shall be allocated among the Transferred Assets purchased hereunder
as set forth on Schedule 1.4 attached hereto. The Seller and the Buyer each
hereby covenant and agree that neither of them will take a position on any
income tax return, before any governmental agency, or in any judicial
proceeding that is in any way inconsistent with the allocation set forth on
Schedule 1.4. Each party shall duly and timely file Form 8594 with its
appropriate tax returns.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller represents and
warrants to the Buyer as follows:
SECTION 2.1 Organization and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Kentucky. The nature of the Seller's business or
the Transferred Assets does not require the
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Seller to be licensed or qualified in any other jurisdiction. The Seller has
made available to the Buyer complete and correct copies of the Articles of
Incorporation and By-laws of the Seller as currently in effect.
SECTION 2.2 Corporate Power and Authority. The Seller has the
corporate power and authority to own and hold its properties and to carry on
its business as now conducted. The Seller (a) has the corporate power and
authority to execute, deliver and perform this Agreement and the Exhibits and
to deliver the Schedules hereto and the other documents and instruments
contemplated hereby (collectively this Agreement, the Exhibits and Schedules
hereto, and the other documents and instruments contemplated hereby shall
constitute the "Documents") and to consummate the transactions contemplated
hereby and thereby and (b) has taken all necessary corporate and shareholder
action to authorize and approve the execution, delivery and performance of
this Agreement and the other Documents and the consummation of the
transactions contemplated hereby and thereby. This Agreement and the other
Documents have been duly and validly executed and delivered by the Seller and
constitute valid and binding obligations of the Seller, enforceable against
the Seller in accordance with their terms.
SECTION 2.3 Validity, Etc. Except as set forth on Schedule 2.3,
neither the execution and delivery of this Agreement or the other Documents,
the consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement or the other Documents and such other
agreements in compliance with the terms and conditions hereof and thereof by
the Seller will (i) violate, conflict with or result in any breach of any
trust agreement, Articles of Incorporation, bylaw, judgment, decree, order,
statute or regulation applicable to the Seller, (ii) violate, conflict with
or result in a breach, default or termination or give rise to any right of
termination, cancellation or acceleration of the maturity of any payment date
of any of the obligations of the Seller or increase or otherwise affect the
obligations of the Seller under any law, rule, regulation or any judgment,
decree, order, governmental permit, license or order or any of the terms,
conditions or provisions of any mortgage, indenture, note, license, agreement
or other instrument or obligation related to the Seller or to the Seller's
ability to consummate the transactions contemplated hereby or thereby, except
for such defaults (or rights of termination, cancellation or acceleration) as
to which requisite waivers or consents have been obtained in writing and
provided to the Buyer, (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Seller or (iv) result in the
creation of any Claim upon the Transferred Assets.
SECTION 2.4 Subsidiaries and Investments. The Seller has no
subsidiaries and does not own, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any other corporation,
partnership, association, trust, joint venture or other entity.
SECTION 2.5 Books and Records. The minute books of the Seller, which
have been and will be made available to the Buyer and its representatives,
contain accurate records of all meetings of and corporate actions or written
consents by the shareholders and Board of Directors of the Seller set forth
in such minute books.
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SECTION 2.6 Financial Statements. The Seller has previously
furnished to the Buyer, and attached hereto as Schedule 2.6 are, the
unaudited balance sheet of the Seller as at December 31, 1997, the related
statement of income for the fiscal year then ended, the compiled balance
sheet of the Seller as at December 31, 1996 and 1995, the related statements
of income and retained earnings and cash flows for the fiscal years then
ended (the "1996 Financial Statements"), and the unaudited balance sheet of
the Seller (the "Balance Sheet") as at May 15, 1998 (the "Balance Sheet
Date") and the related statements of income for the 41/2 months then ended.
The 1996 Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied and all of the
financial statements were prepared from the books and records of the Seller.
Such books and records are complete and correct in all material respects,
accurately reflect all transactions of the Seller's business, and have been
made available to the Buyer for examination. The 1996 Financial Statements
fairly present the financial position of the Seller as of the dates thereof
and the results of its operations and cash flows for the periods ended on the
dates thereof. The 1996 Financial Statements reflect reserves appropriate
and adequate for all known material liabilities and reasonably anticipated
losses as required by GAAP. Since the Balance Sheet Date (i) there has been
no change in the assets, liabilities or financial condition of the assets of
the Seller from that reflected in the Balance Sheet except for changes in the
ordinary course of business consistent with past practice and which have not
been materially adverse, and (ii) none of the business, prospects, financial
condition, operations, property or affairs of the Seller has been materially
adversely affected by any occurrence or development, individually or in the
aggregate, whether or not insured against. The Seller has disclosed to the
Buyer all material facts relating to the preparation of all of the financial
statements.
SECTION 2.7 Absence of Undisclosed Liabilities.
(a) Except as and to the extent of the amounts
specifically reflected or reserved against in the Balance Sheet, or except as
set forth on Schedule 2.7, the Seller has no liabilities or obligations of
any nature whatsoever due or to become due, accrued, absolute, contingent or
otherwise, except for liabilities and obligations incurred since the date
thereof in the ordinary course of business and consistent with past practice.
The Seller does not know of, and has no reason to know of, any basis for the
assertion against the Seller of any liability or obligation not fully
reflected or reserved against in the Balance Sheet.
(b) The Seller is not bound by any agreement, or subject
to any charter or other corporate restriction or any legal requirement, which
has, or in the future can reasonably be expected to have, a material adverse
effect on the business or prospects of the Seller.
SECTION 2.8 Employment and Labor Matters.
(a) Schedule 2.8 lists all employees and officers of the
Seller on the date hereof, along with the amount of the current annual
salaries and total compensation paid or due for services to each employee or
officer for the most recent fiscal year end and the year to date, and a full
and complete description of any commitments to such employees and officers
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with respect to compensation payable thereafter. To the best knowledge of
the Seller, no key employee or group of employees has any plans to terminate
employment with the Seller.
(b) The Seller is not a party to or bound by any
collective bargaining agreement with any labor organization, group or
association covering any of its employees, and the Seller has no knowledge of
any attempt to organize the Seller's employees by any Person, unit or group
seeking to act as their bargaining agent. There are no pending or, to the
best knowledge of the Seller, threatened charges (by employees, their
representatives or governmental authorities) of unfair labor practices or of
employment discrimination or of any other wrongful action with respect to any
aspect of employment of any person employed or formerly employed by the
Seller. No union representation election relating to employees of the Seller
has been scheduled by any governmental agency or authority, no organizational
effort is being made with respect to any of such employees, and there is no
investigation of the Seller's employment policies or practices by any
governmental agency or authority pending or threatened. The Seller is not
currently, nor has it been, involved in labor negotiations with any unit or
group seeking to become the bargaining unit for any employees of the Seller.
The Seller has not experienced any material work stoppages, and to the best
knowledge of the Seller, no work stoppage is planned.
SECTION 2.9 Real Property. The Seller owns no real property.
SECTION 2.10 Powers of Attorney; Absence of Limitations on
Competition; Guarantees.
Except as set forth in Schedule 2.10, (i) no power of attorney or
similar authorization given by the Seller presently is in effect or
outstanding; (ii) no contract or agreement to which the Seller is a party or
is bound or to which the Seller's properties or assets are subject limits the
freedom of the Seller to compete in any line of business or with any Person;
and (iii) the Seller is not a party to or bound by any guarantee of any debt
or obligation of any other Person.
SECTION 2.11 Significant Suppliers. Set forth on Schedule 2.11 is a
true and correct list of the Seller's ten largest suppliers for the most
recent twelve (12) month period ending December 31, 1997, and for the four
(4) month period ending April 30, 1998, together with the amount of services
attributable to such suppliers expressed in dollars and as a percentage of
total sales and services. None of the suppliers identified on Schedule 2.11
has terminated, materially reduced or threatened to terminate or materially
reduce its supplies to the Seller during the period covered by such schedule.
SECTION 2.12 Governmental Approvals. No registration or filing with,
or consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Seller of this Agreement.
SECTION 2.13 Absence of Adverse Change; Conduct of Business.
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During the period from the Balance Sheet Date to and including the date
of this Agreement, except as set forth on Schedule 2.13, the Seller has not
(i) borrowed or agreed to borrow any material amount of funds or incurred any
liability or obligation of any nature (whether accrued, absolute, contingent
or otherwise), or guaranteed or agreed to guarantee any obligations of
others, (ii) canceled any indebtedness owing to it or any claims that it
might have possessed, waived any material rights of substantial value or
sold, leased, encumbered, transferred or otherwise disposed of, or agreed to
sell, lease, encumber, or otherwise dispose of its assets or permitted any of
its assets to be subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, (iii) made any capital
expenditure or commitment therefor, (iv) increased its indebtedness for
borrowed money or made any loan to any Person, (v) written off as
uncollectible any notes or accounts receivable, except write-offs in the
ordinary course of business charged to applicable reserves, (vi) made any
material change in any method of accounting or auditing practice, (vii)
otherwise conducted its business or entered into any transaction, except in
the usual and ordinary manner, or (viii) agreed, whether or not in writing,
to do any of the foregoing.
SECTION 2.14 Certain Practices. None of the Seller, the Seller's
directors or officers, or to the best knowledge of the Seller, the Seller's
employees have, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any
false or fictitious entry on the books or records of the Seller or any
subsidiary; made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment; given any favor or gift which is not deductible for
federal income tax purposes; or made any bribe, kickback, or other payment of
a similar or comparable nature, whether lawful or not, to any person or
entity, private or public, regardless of form, whether in money, business or
to obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
SECTION 2.15 Compliance with Law; Licenses and Permits.
Except as set forth on Schedule 2.15, the Seller has complied in all
material respects with all laws, ordinances, legal requirements, rules,
regulations and orders applicable to it, its operations, properties, assets,
products and services. Except as set forth on Schedule 2.15, there is no
existing law, rule, regulation or order, and the Seller is not aware of any
proposed law, rule, regulation or order, whether Federal, state or local,
which would prohibit or materially restrict the Buyer from, or otherwise
materially adversely affect the Buyer in, conducting the Seller's business in
the manner heretofore conducted by the Seller in any jurisdiction in which
the business is now conducted. The Seller possesses all franchises, permits,
licenses, certificates and consents required from any governmental or
regulatory authority in order for the Seller to carry on its business as
currently conducted and to own and operate its properties and assets as now
owned and operated and all of such licenses and permits are set forth on
Schedule 2.15.
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SECTION 2.16 Employee Benefits.
(a) Set forth on Schedule 2.16 is a list of all pension,
profit sharing, retirement, deferred compensation, multiemployer (as defined
under ERISA), stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical insurance, life insurance,
fringe benefit, welfare and other employee benefit plans, programs or
arrangements pursuant to which the Seller or its ERISA Affiliates provides
(directly or indirectly, individually or jointly through others) benefits or
compensation to or on behalf of employees or independent contractors or
former employees or former independent contractors of the Seller or its ERISA
Affiliates, whether formal or informal, whether or not written ("Employee
Plan"). On request by the Buyer, the Seller shall furnish a copy of each
Employee Plan and a copy of any related materials. The Seller will maintain
the benefits listed on Schedule 2.16 in full force and effect through the
Effective Date. The Buyer shall have no obligation or liability of any kind
or nature for any compensation or benefits of any kind or nature to the
employees or consultants of the Seller for services rendered prior to the
Effective Date.
(b) Neither the Seller nor any of its ERISA Affiliates
is or has been a participant in, or is or has been obligated to maintain or
to make contributions to, a multi-employer plan (within the meaning of ERISA
Section 3(37) and ERISA Section 4001(a)(3)) or an Employee Plan which is
subject to Title IV of ERISA. Neither the Seller nor any ERISA Affiliate has
sponsored, contributed to or been obligated under Title I or IV of ERISA to
contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
(c) Neither the Seller nor its ERISA Affiliates have
entered into any contract, agreement or arrangement (whether oral or written)
under which the Seller or its ERISA Affiliates have assumed any liability
relating to their clients' retirement plans, nor have the Seller and/or its
ERISA Affiliates made any verbal representations that the use of any
employees of the Seller or its ERISA Affiliates would have no adverse
consequence on such client retirement plans.
(d) Termination of or withdrawal from any Employee Plan
immediately after the Closing Date would not subject the Buyer to any
liability, tax or penalty whatsoever.
(e) For purposes of this Section 2.16, the term "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended,
and the term "ERISA Affiliate" shall mean each trade or business (whether or
not incorporated) which together with the Seller is treated as a single
employer under Section 414(b), (c), (m), (o) or (t) of the Code.
SECTION 2.17 Fixed Assets. Schedule 2.17 contains a true and complete
list of all of the Transferred Assets which are fixed assets as of May 15,
1998. Except as shown on Schedule 2.17, the Seller has good and marketable
title to all of its fixed assets, free and clear of all claims, liens,
mortgages, charges and encumbrances except as disclosed in the Balance Sheet.
All of the Seller's fixed assets, whether owned or leased, are adequate and
usable for the purposes for
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which they are currently used, are in good operating condition and repair and
have been properly maintained.
SECTION 2.18 Insurance. The Seller is, and will be through the
Effective Date, insured with insurers in respect of its properties, assets
and businesses as set forth on the attached Schedule 2.18. Schedule 2.18
lists the insurance coverage carried by the Seller, which insurance will
remain in full force and effect with respect to all events occurring prior to
the Effective Date. Except as set forth on Schedule 2.18, the Seller (i) has
not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion, (ii) has not received notice of
cancellation or non-renewal of any such policy or binder, (iii) is not aware
of any threatened or proposed cancellation or non-renewal of any such policy
or binder, (iv) has not received notice of any insurance premium which will
be materially increased in the future, and (v) is not aware of any insurance
premium which will be materially increased in the future. There are no
outstanding claims under any such policy which have gone unpaid for more than
45 days, or as to which the insurer has disclaimed liability.
SECTION 2.19 Outstanding Contracts. Schedule 2.19 sets forth a
description of all existing contracts, agreements, leases, commitments,
licenses and franchises, which involve obligations or commitments by the
Seller of $5,000 or more and are not cancelable by the Seller without penalty
within 30 days (collectively "Contracts"), whether written or oral, relating
to the Seller. The Seller has delivered or made available to the Buyer true,
correct and complete copies of all of the Contracts specified on Schedule
2.19 which are in writing, and such schedule sets forth a complete
description of all Contracts which are not in writing. All of the Contracts
are in full force and effect and enforceable in accordance with their terms,
except to the extent that the enforceability thereof may be subject to or
affected by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws relating to or affecting the rights
of creditors generally. Except as set forth on Schedule 2.19, the Seller
and, to the best knowledge of the Seller, each other party thereto has
materially performed all the obligations required to be performed by it, has
received no notice of default and is not in default (with due notice or lapse
of time or both) under any of the Contracts. The Seller has no present
expectation or intention of not fully performing all its obligations under
each of the Contracts, and the Seller has no knowledge of any breach or
anticipated breach by the other party to any of the Contracts to which the
Seller is a party. Except as set forth on Schedule 2.19, none of the
Contracts has been terminated; no notice has been given by any party thereto
of any alleged default by any party thereunder; and the Seller is not aware
of any intention or right of any party to declare another party to any of the
Contracts to be in default. Except as set forth on Schedule 2.19, there
exists no actual or, to the best knowledge of the Seller, threatened
termination, cancellation or limitation of the business relationship of the
Seller by any party to any of the Contracts.
SECTION 2.20 Outstanding Leases. Schedule 2.20 sets forth a
description of each agreement by which the Seller leases each parcel of real
property (the "Leased Parcels") used in connection with the Seller's business
(collectively, the "Leases"). The Seller has delivered or made available to
the Buyer true, correct and complete copies of all of the Leases specified on
Schedule 2.20. All rents due under the Leases have been paid. All of the
Leases are in full force and effect and enforceable in accordance with their
terms, except to the extent that the
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enforceability thereof may be subject to or affected by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or
other laws relating to or affecting the rights of creditors generally.
Except as set forth on Schedule 2.20, the Seller and to the best knowledge of
the Seller, each other party thereto has performed all the obligations
required to be performed by it, has received no notice of default and is not
in default (with due notice or lapse of time or both) under any of the
Leases. The Seller has no present expectation or intention of not fully
performing all its obligations under each of the Leases, and the Seller has
no knowledge of any breach or anticipated breach by the other party to any of
the Leases. Except as set forth on Schedule 2.20, none of the Leases has
been terminated; no notice has been given by any party thereto of any alleged
default by any party thereunder; and the Seller is not aware of any intention
or right of any party to declare another party to any of the Leases to be in
default. There exists no actual or, to the best knowledge of the Seller,
threatened termination, cancellation or limitation of the business
relationship of the Seller with any party to any of the Leases.
SECTION 2.21 Intellectual Properties. Schedule 2.21 contains an
accurate and complete list of all domestic and foreign letters patent,
patents, patent applications, patent licenses, software licenses and know-how
licenses, trade names, trademarks, copyrights, unpatented inventions, service
marks, trademark registrations and applications, service xxxx registrations
and applications and copyright registrations and applications, trade secrets
or other confidential proprietary information owned or used by the Seller in
the operation of the Seller's business (collectively the "Intellectual
Property"). Except as set forth on Schedule 2.21 and except for commercial
software licensed for use on personal computers, the Seller owns the entire
right, title and interest in and to the Intellectual Property, trade secrets
and technology used in the operation of its business and each item
constituting part of the Intellectual Property and trade secrets and
technology which is owned by the Seller has been, to the extent indicated in
Schedule 2.21, duly registered with, filed in or issued by, as the case may
be, the United States Patent and Trademark office or such other government
entities, domestic or foreign, as are indicated in Schedule 2.21 and such
registrations, filings and issuances remain in full force and effect. There
have been and are no pending or, to the best knowledge of the Seller,
threatened proceedings or litigation or other adverse claims affecting or
with respect to the Intellectual Property. There is, to the best knowledge
of the Seller, no reasonable basis upon which a claim may be asserted against
the Seller for infringement of any domestic or foreign letters patent,
patents, patent applications, patent licenses and know-how licenses, trade
names, trademark registrations and applications, common law trademarks,
service marks, service xxxx registrations or applications, copyrights,
copyright registrations or applications, trade secrets or other confidential
proprietary information. To the best knowledge of the Seller, no Person is
infringing the Intellectual Property.
SECTION 2.22 Proprietary Information of Third Parties.
Except as disclosed on Schedule 2.22, no third party has claimed or, to
the best knowledge of the Seller, has reason to claim that any Person
employed by or consulting with the Seller ("Related Person") has (i) violated
or may be violating any of the terms or conditions of such person's
employment, non-competition or non-disclosure agreement with such third
party,
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(ii) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party, or
(iii) interfered or may be interfering in the employment relationship between
such third party and any of its present or former employees. No third party
has requested information from the Seller which suggests that such a claim
might be contemplated. Except as disclosed on Schedule 2.22, to the best
knowledge of the Seller, no Related Person has employed or proposes to employ
any trade secret or any information or documentation proprietary to any
former employer and no Related Person has violated any confidential
relationship which such person may have had with any third party, in
connection with the development or sale of any service of the Seller, and the
Seller has no reason to believe there will be any such employment or
violation.
SECTION 2.23 Transactions With Affiliates. No director, officer or
shareholder of the Seller, or member of the family of any such person, or any
corporation, partnership, trust or other entity in which any such person, or
any member of the family of any such person, has a beneficial interest
greater than 5% or is an officer, director, trustee, partner or holder of any
equity interest greater than 5%, is a party to any transaction with the
Seller, including any contract, agreement or other arrangement providing for
the employment of, furnishing of services by, rental of real or personal
property from or otherwise requiring payments or involving other obligations
to any such person or firm.
SECTION 2.24 Taxes. The Seller has timely filed a valid election to
be treated as an S corporation in accordance with the provisions of Section
1361 of the Code, effective for its tax year ended December 31, 1993 and has
qualified and continues to qualify as an S corporation for all years and
periods thereafter through and including the close of business on the Closing
Date. The Seller is not and has not been subject to the built-in gains tax
under Section 1374 of the Code or to the tax on passive income under Section
1375 of the Code. Schedule 2.24 lists all the states and localities with
respect to which the Seller is required to file any corporate, income and/or
franchise tax returns and sets forth whether the Seller is treated as the
equivalent of an S corporation by or with respect to each such state and/or
locality. Except as set forth on Schedule 2.24, all federal, state, local
and foreign tax returns and tax reports required to be filed by the Seller on
or before the date hereof have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and reports
are required to be filed and all amounts shown as owing thereon have been
paid. All taxes (including, without limitation, income, accumulated
earnings, property, sales, use, franchise, excise, license, value added,
fuel, employees' income withholding and social security taxes) which have
become due or payable or are required to be collected by the Seller or are
otherwise attributable to any periods ending on or before the Closing Date
and all interest and penalties thereon, whether disputed or not, have been
paid or will be paid in full or adequately reflected on the Balance Sheet or
the Seller's books and records in accordance with generally accepted
accounting principles on or prior to the Closing Date. Except as set forth
on Schedule 2.24, all deposits required by law to be made by the Seller with
respect to employees' withholding taxes have been duly made, and as of the
Closing Date all such deposits due will have been made. The Seller has
delivered to the Buyer true and complete copies of all of the Seller's
federal and state income tax returns for the fiscal periods ended December
31, 1997 and 1996 and all reports and results of income tax audits, if any,
related thereto. Except as set forth on Schedule 2.24, no examination of any
tax return of the
11
Seller is currently in progress. There are no outstanding agreements or
waives extending the statutory period of limitations applicable to any such
tax return.
SECTION 2.25 Litigation. Except as set forth on Schedule 2.25, there
is no (i) action, suit, claim, proceeding or investigation pending or, to the
best knowledge of the Seller, threatened against or affecting the Seller
(whether or not such Seller is a party or prospective party thereto), at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding pending
relating to the Seller or (iii) governmental inquiry pending or threatened
against or involving the Seller, and there is no basis for any of the
foregoing. The Seller has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to the
business, prospects, financial condition, operations, property or affairs of
the Seller. There are no outstanding orders, writs, judgments, injunctions
or decrees served upon the Seller by any court, governmental agency or
arbitration tribunal against the Seller. There are no facts or circumstances
which may result in institution of any action, suit, claim or legal,
administrative or arbitration proceeding or investigation against, involving
or affecting the Seller or the transactions contemplated hereby. The Seller
is not in default with respect to any order, writ, injunction or decree known
to or served upon it from any court or of any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. Except as disclosed on Schedule 2.25,
there is no action or suit by the Seller pending or threatened against others.
SECTION 2.26 Environmental Matters.
(a) Compliance. The Seller and all Leased Parcels are
in compliance with all applicable laws, rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities with
respect to all environmental statutes, rules and regulations. Except as set
forth on Schedule 2.26, the Seller has not received notice of, nor does the
Seller have knowledge of, any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Seller or the Seller's predecessors, either collectively, individually or
severally, which may interfere with or prevent continued compliance with, or
which may give rise to any common law or legal liability or otherwise form
the basis of any claim, action, suit, proceeding, hearing, or investigation,
based on or related to the disposal, storage, handling, manufacture,
processing, distribution, use, treatment or transport, or the emission,
discharge, release or threatened release into the environment, of any
Substance. As used in this Section 2.26, the term "Substance" or
"Substances" shall mean any pollutant, contaminant, hazardous substance,
hazardous material, hazardous waste or toxic waste, as defined in any
presently enacted federal, state or local statute or any regulation that has
been promulgated pursuant thereto. No part of any of the Leased Parcels has
been listed or proposed for listing on the National Priorities List
established by the United States Environmental Protection Agency, or any
corresponding list by any state or local authorities.
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(b) Environmental Substance Liability. No event has
occurred or condition exists or operating practice is being employed that
could give rise to liability on the part of the Seller, either at the present
time or in the future, for any losses, liabilities, damages (whether
consequential or otherwise), settlements, penalties, interest, expenses and
costs of responses, including any such liability on account of the right of
any governmental or private entity or person, and including closure expenses,
costs of assessment, containment, removal, or response (other than monitoring
or transportation or disposal of materials required to be transported or
disposed of in the ordinary course of business consistent with past practice)
arising under any rule or federal, state, or local statute, or any regulation
that has been promulgated pursuant thereto, or common law, as a result of or
in connection with, or alleged to be as a result of or in connection with,
the following (collectively the "Hazardous Activities"):
(1) the handling, storage, use, transportation or
disposal of any Substances in or near or from the Leased Parcels;
(2) the handling, storage, use, transportation or
disposal of any Substances by the Seller or its predecessors which Substances
were a product, by-product or otherwise resulted from the operations
conducted by or on behalf of the Seller or its predecessors;
(3) any intentional or unintentional emission,
discharge or release of any Substances in or near or from facilities into or
upon the air, surface water, ground water or land or any disposal, handling,
manufacturing, processing, distribution, use, treatment, or transport of such
Substances in or near or from facilities by or on behalf of the Seller or its
predecessors; or
(4) the presence of any toxic or hazardous building
materials (including but not limited to friable asbestos or similar
substances) in any facilities of the Seller, including but not limited to the
inclusion of such materials in the exterior and interior walls, floors,
ceilings, tile, insulation or any other portion of building structures.
(c) Environmental Permits. The Seller has obtained and
holds all registrations, permits, licenses, and approvals issued by or on
behalf of any federal, state or local governmental body or agency if any
("Environmental Permits") that are required in connection with the operation
by the Seller of the Leased Parcels, the discharge or emission of Substances
by the Seller from the Leased Parcels or the generation, treatment, storage,
transportation, or disposal of any such Substances by the Seller. Such
Environmental Permits, which are described on Schedule 2.26, are currently
effective and sufficient for the operation of the Leased Parcels and the
business of the Seller as currently conducted and intended to be conducted.
The Seller is in compliance with all terms and conditions of the
Environmental Permits, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in those laws or provisions or contained
in any regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder and applicable to
the Seller.
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(d) Deliveries. The Seller has delivered to the Buyer
true and complete copies and results of any reports, studies, analyses,
tests, or monitoring possessed or initiated by the Seller pertaining to
Substances or Hazardous Activities in, on, or under the Leases Parcels or
concerning compliance by the Seller or any other Person for whose conduct
they are or may be held responsible, with environmental statutes, rules and
regulations.
SECTION 2.27 Broker's or Finder's Fees. Except as set forth on
Schedule 2.27, no agent, broker, person or firm acting on behalf of the
Seller is, or will be, entitled to any commission or broker's or finder's
fees from of the Seller or from any person controlling, controlled by or
under common control with the Seller in connection with any of the
transactions contemplated herein.
SECTION 2.28 Inventory. All inventory of the Seller, whether or not
reflected in the financial statements or Balance Sheet, consists of a quality
and quantity usable and salable in the ordinary course of business, except
for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the financial
statements or the Balance Sheet, as the case may be (the "Inventory"). A
list of Inventory of the Seller as of Effective Time is set forth on Schedule
2.28. As of the Effective Time, the value of the Inventory was $113,044.65.
All Inventories not written off have been priced at the lower of cost or
market on a first in, first out basis. The quantities of each item of
Inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the Company.
SECTION 2.29 Accounts Receivable. The accounts receivable and other
debts due or recorded in the respective records and books of account of the
Seller as being due to the Seller as of the Effective Time, all of which are
set forth on Schedule 2.29 (the "Accounts Receivable"), arose in the ordinary
course of business of the Seller, are not subject to any counterclaim or
set-off and are fully collectible within one (1) year after the Effective
Date without resort to litigation and without offset or counterclaim.
SECTION 2.30 Receipt of Goods on Credit. Set forth on Schedule 2.30
is a list of goods received by the Seller on credit after May 5, 1998
(specifying the creditor, amount and date received). The Seller has not
misrepresented its solvency in writing to any of its creditors within three
(3) months before the delivery of goods received on credit.
SECTION 2.31 Disclosure. All Documents delivered or to be delivered
by or on behalf of the Seller in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct. Neither
this Agreement, nor any of the other Documents contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
made by the Seller herein or therein, in light of the circumstances in which
made, not misleading. There is no fact known to the Seller which materially
and adversely affects the business, prospects or financial condition of the
Seller or its properties or assets, which has not been set forth in the
Documents.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As an inducement to the Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, the Buyer represents and
warrants to the Seller as follows:
SECTION 3.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Kentucky and is duly qualified to transact business as a foreign corporation
in each jurisdiction in which the failure to so qualify would have a material
adverse impact on the Buyer's ability to purchase the Transferred Assets
pursuant to this Agreement and perform its obligations under this Agreement.
SECTION 3.2 Corporate Power and Authority. The Buyer has the
corporate power and authority to execute, deliver and perform this Agreement
and the other Documents. The execution, delivery and performance of the
Documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by all
necessary corporate action of the Buyer. The Documents to be executed and
delivered by the Buyer have been duly executed and delivered by, and
constitute the legal, valid and binding obligation of the Buyer enforceable
against the Buyer in accordance with their terms.
SECTION 3.3 Validity, Etc. Neither the execution and delivery by the
Buyer of this Agreement and the other Documents, the consummation by the
Buyer of the transactions contemplated hereby or thereby, nor the performance
by the Buyer of this Agreement and such other agreements in compliance with
the terms and conditions hereof and thereof will (i) violate, conflict with
or result in any breach of any trust agreement, articles of incorporation,
bylaw, judgment, decree, order, statute or regulation applicable to the
Buyer, (ii) violate, conflict with or result in a breach of or default (or
give rise to any right of termination, cancellation or acceleration) under
any law, rule or regulation or any judgment, decree, order, governmental
permit, license or order or any of the terms, conditions or provisions of any
mortgage, indenture, note, license, agreement or other instrument to which
the Buyer is a party, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer.
SECTION 3.4 Broker's or Finder's Fees. No agent, broker, person or
firm acting on behalf of the Buyer is, or will be, entitled to any commission
or broker's or finder's fees from the Buyer, or from any person controlling,
controlled by or under common control with the Buyer, in connection with any
of the transactions contemplated herein.
SECTION 3.5 Disclosure. All Documents delivered or to be delivered
by or on behalf of the Buyer in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct. Neither
this Agreement, nor any of the other Documents contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
15
made by the Buyer herein or therein, in light of the circumstances in which
made, not misleading. There is no fact known to the Buyer which may have a
material adverse effect on the Buyer's ability to pay its obligations under
this Agreement, which has not been set forth in the Documents.
ARTICLE 4
COVENANTS AND AGREEMENTS
SECTION 4.1 Best Efforts. The Seller and the Buyer shall each use
its best efforts to procure upon reasonable terms and conditions all consents
and approvals, completion of all filings, all registrations and certificates,
and satisfaction of all other requirements prescribed by law which are
necessary for the consummation of the transactions contemplated by this
Agreement and the Buyer's ownership and operation of the Seller's business
after the Closing Date. Prior to the Closing Date, the Seller will use its
best efforts to preserve its relationships with its employees, customers and
others having business relationships with the Seller.
SECTION 4.2 Tax Returns. The Seller shall prepare and timely file,
at its sole expense, all of its required tax returns for all periods ending
on or prior to the Effective Date. The Seller shall be responsible for the
payment of, and will indemnify, defend and hold the Buyer harmless against
all taxes due or assessed which relate to the operations of the Seller's
business for all periods ending on or prior to the Effective Date.
SECTION 4.3 Investigations. The Seller shall give the Buyer and its
employees, accountants, attorneys and other authorized representatives full
access during all reasonable times to all the premises, properties, books and
records, and furnish the Buyer with such financial and operating data,
analyses and other information of any kind respecting the Seller's business
and properties as the Buyer shall from time to time request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with business operations.
SECTION 4.4 Payment of Liabilities. Except for the Assumed
Liabilities, the Seller shall remain liable for the payment and satisfaction
in full all of its other obligations and liabilities, of any nature
whatsoever, which accrue prior or subsequent to the Effective Date. In
addition, the Seller shall remain liable for any and all liabilities arising
from any of its creditors' right to reclaim under KRS Section 355.2-702.
SECTION 4.5 Special Provisions Regarding Employees of the Seller.
(a) New Employees of the Buyer. It is the intention of
the Buyer, and the Seller hereby acknowledges and agrees with such position,
that any employees of the Seller that the Buyer hires will be new employees
of the Buyer as of the Effective Date or the date of hire, whichever is
later. Such new employees shall be entitled only to such compensation and
16
employee benefits as are agreed to by such employees and the Buyer or as are
otherwise provided by the Buyer, in its sole discretion.
(b) Hiring of Employees. The Buyer will use its
reasonable efforts to hire the existing manufacturing-related employees of
the Seller in connection with its purchase of the Transferred Assets;
provided, however, that the Buyer shall be entitled to review employee
records, conduct employee interviews and employee screening procedures used
by the Buyer in its business, and may refuse to offer employment to any such
employee of the Seller if such employee fails to meet the hiring criteria of
the Buyer. The Buyer will not hire the existing sales and marketing
employees of the Seller.
(c) No Contributions. After the Closing, the Seller
shall make no contributions to any Employee Plan on behalf of any former
employee or independent contractor of the Seller who is employed by the Buyer
after the Closing.
(d) COBRA Issues. The Buyer shall be a successor
employer of Seller solely for the purposes of providing continuation coverage
to the extent required under Code Section 4980B and ERISA Section 601 to
individuals receiving such continuation coverage on the Effective Date and
individuals qualifying (or who would otherwise qualify but for this Section
4.5) for such coverage commencing on or after the Effective Date. The Seller
shall be liable for any and all liabilities, costs, expenses and fees
whatsoever arising under Code Section 4980B and ERISA Section 601 before
the Effective Date.
SECTION 4.6 Consents of Landlords. The Seller shall have obtained
consents (when required by the terms of the lease) from all lessors of real
property leased by the Seller to the assignment of such leases to the Buyer
without any amendment, modification or change in the terms of such leases, in
substantially the form attached as Exhibit B hereto.
ARTICLE 5
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to make deliveries to the Seller pursuant to
Section 1.2 and 1.3 hereof and to consummate the other transactions
contemplated hereby is subject to the satisfaction, on or before the Closing
Date, of the following conditions each of which may be waived by the Buyer in
its sole discretion:
SECTION 5.1 Consents. Except for the consents of landlords provided
for in Section 4.6 above and except as set forth on Schedule 5.1, all
requisite governmental approvals identified on and consents of third parties
identified on such schedule or otherwise identified by the Seller as required
to be received to prevent any material license, permit or agreement relating
to the Seller's business from terminating prior to its scheduled termination,
as a result of the consummation of the transactions contemplated hereby,
shall have been obtained and all permits listed in Schedule 2.15 shall have
been transferred or reissued to the Buyer.
17
SECTION 5.2 Employment Agreement.
Xxxxx Xxxxxxxx shall have executed and delivered to the Buyer, an
Employment Agreement, in substantially the form attached hereto as Exhibit D.
SECTION 5.3 Noncompetition Agreement.
Each of the shareholders of the Seller shall have executed and delivered
to the Buyer, a Noncompetition Agreement, in substantially the form attached
hereto as Exhibit E.
ARTICLE 6
CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to transfer the Transferred Assets to the
Buyer and to consummate the other transactions contemplated hereby is subject
to the satisfaction, on or before the Closing Date, of the following
conditions, each of which may be waived by the Seller in its sole discretion:
SECTION 6.1 Employment Agreement. The Buyer shall have executed and
delivered an Employment Agreement, in substantially the form attached hereto
as Exhibit D.
ARTICLE 7
THE CLOSING AND CERTAIN CLOSING DELIVERIES
SECTION 7.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction or waiver of the conditions contained in this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Xxxxxx & Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 on May 27, 1998 or on such other date
and time as may be mutually agreed upon by the parties (the "Closing Date").
The transactions contemplated by this Agreement shall be effective as of the
close of business (the "Effective Time") on May 15, 1998 (the "Effective
Date").
SECTION 7.2 Deliveries by the Seller. At the Closing, the Seller
will deliver or cause to be delivered to the Buyer the following:
(a) All required consents of third parties to the sale
conveyance, transfer, assignment and delivery of the Transferred Assets of
the Seller hereunder;
(b) A certificate of the Secretary of the Seller
certifying as of the Closing Date, (i) a true, correct, and complete copy of
the Articles of Incorporation of the Seller
18
and all amendments thereto as in effect on the Closing Date; (ii) a true,
correct, and complete copy of the by-laws of the Seller and all amendments
thereto as in effect on the Closing Date; (iii) a true, correct, and complete
copy of the resolutions approved and adopted by the Seller's Board of
Directors and Shareholders authorizing and approving the execution,
performance and delivery of this Agreement and the transactions contemplated
by this Agreement; (iv) Certificate of Existence from the Kentucky Secretary
of State and all other jurisdictions where the Seller is qualified to do
business; and (v) the incumbency of the duly authorized officers of the
Seller.
(c) The affidavit of the Seller certifying as to its
non-foreign status in accordance with Section 1445(b)(2) of the Code;
(d) The Xxxx of Sale, Assignment and Assumption
Agreement required by Section 1.1(c);
(e) The Lease Assignment and Assumption Agreement
required by Section 1.1(c);
(f) The Employment Agreement required by Section 5.2
above;
(g) The Noncompetition Agreement required by Section 5.3
above; and
(h) All other documents, instruments and writings
required to be delivered by the Seller at or prior to the Closing Date
pursuant to this Agreement or otherwise required in connection herewith.
SECTION 7.3 Deliveries by the Buyer. At the Closing, the Buyer will
deliver the following to or for the account of the Seller or certain of its
employees, as the case may be:
(a) The payment required by Section 1.2(a) above;
(b) The Promissory Note of the Buyer required by Section
1.2(b) above;
(c) The Xxxx of Sale, Assignment and Assumption
Agreement required by Section 1.3;
(d) The Lease Assignment and Assumption Agreement
required by Section 1.3;
(e) The Employment Agreement required by Section 6.1
above;
(f) A certificate of an officer of the Buyer certifying
as of the Closing Date (i) a true, correct, and complete copy of the Articles
of Incorporation of the Buyer and all amendments thereto as in effect on the
Closing Date; (ii) a true, correct, and complete copy of
19
the bylaws of the Buyer and all amendments thereto as in effect on the
Closing Date; (iii) a true, correct, and complete copy of the resolutions
approved and adopted by the Board of Directors of the Buyer authorizing the
transactions contemplated herein; and (iv) Certificate of Existence from the
Kentucky Secretary of State; and
(g) All other documents, instruments and writings
required to be delivered by the Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise required in connection herewith.
ARTICLE 8
TERMINATION
[INTENTIONALLY OMITTED]
ARTICLE 9
INDEMNIFICATION
SECTION 9.1 Survival. All representations and warranties in this
Agreement and the other Documents shall survive the Closing of the purchase
of the Transferred Assets contemplated hereby and any investigation at any
time made by or on behalf of any party for a period of three years and all
such representations and warranties shall expire on the third anniversary of
the Closing Date, except that (a) claims, if any, asserted in writing prior
to such third anniversary identified as a claim for indemnification pursuant
to this Article IX shall survive until finally resolved and satisfied in
full; and (b) tax or environmental claims arising from a breach of Section
2.24 or Section 2.26, respectively, shall survive for the full period of the
applicable statute of limitations, and until finally resolved and satisfied
in full if asserted on or prior to the expiration of any such period. The
representations and warranties shall not be affected or otherwise diminished
by any investigation at any time by or on behalf of the party for whose
benefit such representations and warranties were made.
SECTION 9.2 Indemnification by the Seller. Subject to the terms
herein, the Seller shall indemnify, defend, and hold the Buyer and the
respective officers, directors, and employees of the Buyer, and their
successors and assigns (the "Seller's Indemnitees") harmless from, against
and with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost or expense of any kind or character, including
reasonable attorneys' fees (the "Damages"), arising out of or in any manner
incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of
any warranty of the Seller contained in this Agreement;
20
(b) Any failure by the Seller to perform or observe, or
to have performed or observed, in full, any covenant, agreement or condition
to be performed or observed by it under this Agreement;
(c) Reliance by the Buyer on any books or records of the
Seller or written information furnished to the Buyer pursuant to this
Agreement by or on behalf of the Seller in the event that such books and
records or written information are false or materially inaccurate; or
(d) Liabilities or obligations of, or claims against,
the Buyer (whether absolute, accrued, contingent or otherwise) relating to,
or arising out of, the operation of the Seller's business prior to the
Closing Date or facts and circumstances relating specifically to the Seller's
business, the Leased Parcels, or the Seller existing at or prior to the
Closing Date, including but not limited to matters set forth on Schedule
2.25, whether or not such liabilities, obligations or claims were known on
such date, excluding only the Assumed Liabilities.
SECTION 9.3 Notice to the Seller, Etc. If any of the matters as to
which the Seller's Indemnitees are entitled to receive indemnification under
Section 9.2 should entail litigation with or claims asserted by parties other
than the Seller, the Seller shall be given prompt notice thereof and shall
have the right, at his expense, to control such claim or litigation upon
prompt notice to the Buyer of his election to do so. To the extent requested
by the Seller, the Buyer, at its expense, shall cooperate with and assist the
Seller, in connection with such claim or litigation. The Buyer shall have
the right to appoint, at its expense, single counsel to consult with and
remain advised by the Seller in connection with such claim or litigation.
The Seller shall have final authority to determine all matters in connection
with such claim or litigation; provided, however, that the Seller shall not
settle any third party claim without the consent of the Buyer, which shall
not be unreasonably denied or delayed.
SECTION 9.4 Indemnification by the Buyer. The Buyer shall indemnify,
defend, and hold the Seller and its successors and assigns (the "Buyer's
Indemnitees") harmless from, against and with respect to any claim,
liability, obligation, loss, damage, assessment, judgment, cost or expense of
any kind or character, including reasonable attorneys' fees (the "Damages"),
arising out of or in any manner incident, relating or attributable to:
(a) Any inaccuracy in any representation or breach of
warranty of the Buyer contained in this Agreement;
(b) Any failure by the Buyer to perform or observe, or
to have performed or observed, in full, any covenant, agreement or condition
to be performed or observed by it under any of the Documents;
(c) Reliance by the Seller on any books or records of
the Buyer or reliance by the Seller on any written information furnished to
the Seller pursuant to this Agreement by or on behalf of the Buyer in the
event that such books and records or written information are false or
inaccurate;
21
(d) The failure of the Buyer to pay or perform the
Assumed Liabilities, Contracts and Leases subsequent to the Closing Date; or
(e) Liabilities or obligations of, or claims against,
the Seller (whether absolute, accrued, contingent or otherwise) relating to,
or arising out of, the operation of the Seller's business subsequent to the
Closing Date.
SECTION 9.5 Notice to the Buyer, Etc. If any of the matters as to
which the Buyer's Indemnitees are entitled to receive indemnification under
Section 9.4 should entail litigation with or claims asserted by parties other
than the Buyer, the Buyer shall be given prompt notice thereof and shall have
the right, at its expense, to control such claim or litigation upon prompt
notice to the Seller of its election to do so. To the extent requested by
the Buyer, the Seller, at his expense, shall cooperate with and assist the
Buyer, in connection with such claim or litigation. The Seller shall have
the right to appoint, at its expense, single counsel to consult with and
remain advised by the Buyer in connection with such claim or litigation. The
Buyer shall have final authority to determine all matters in connection with
such claim or litigation; provided, however, that the Buyer shall not settle
any third party claim without the consent of the Seller, which shall not be
unreasonably denied or delayed.
SECTION 9.6 Survival of Indemnification. The obligations to
indemnify and hold harmless pursuant to this Article IX shall survive the
Closing of the purchase of the Transferred Assets contemplated hereby for a
period of three years, notwithstanding any investigation at any time made by
or on behalf of any party, except that (a) claims, if any, asserted in
writing prior to such third anniversary identified as a claim for
indemnification pursuant to this Article IX shall survive until finally
resolved and satisfied in full; and (b) tax or environmental claims arising
from a breach of Section 2.24 or Section 2.26, respectively, shall survive
for the full period of the applicable statute of limitations, and until
finally resolved and satisfied in full if asserted on or prior to the
expiration of any such period.
SECTION 9.7 Offset. The Seller acknowledges and agrees that the
Buyer shall be entitled to offset any indemnity claim under Section 9.2
against any payment due to the Seller under Section 1.2(b) hereof at the
Buyer's sole option.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Knowledge of the Seller. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to
the best knowledge of the Seller, the Seller confirms that it has made due
and diligent inquiry of its President and other key employees as to the
matters that are the subject of such representation and warranty.
SECTION 10.2 Knowledge of the Buyer. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to
the best of knowledge of the
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Buyer, the Buyer confirms that it has made due and diligent inquiry of its
President or Senior Vice President as to the matters that are the subject of
such representations and warranties.
SECTION 10.3 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
SECTION 10.4 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) sent by recognized overnight courier, (iii) made by telecopy or
facsimile transmission, or (iv) sent by registered or certified mail, return
receipt requested, postage prepaid.
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If to the Buyer:
TD Windows, Inc.
c/o ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, President
Fax No: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Coffee, Esq.
Fax No: (000) 000-0000
If to the Seller:
Allhom Eagle Windows & Doors, Inc.
c/o Xxxxx X. Xxxxxxxx
00000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Fax No: ___________________
With a copy to:
Xxxxxxxx, Xxxxxxxx & Xxxxxxxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above, (ii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, (iii) if made by telecopy or
facsimile transmission, at the time that receipt thereof has been
acknowledged by electronic confirmation or otherwise, or (iv) if sent by
registered or certified mail, on the fifth business day following the day
such mailing is sent. The address of any party herein may be changed at any
time by written notice to the parties.
SECTION 10.5 Entire Agreement. This Agreement and the other Documents
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings relating to
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the subject matter hereof. No statement, representation, warranty, covenant
or agreement of any kind not expressly set forth in the other Documents shall
affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.
SECTION 10.6 Modifications and Amendments. The terms and provisions
of this Agreement may be modified or amended only by written agreement
executed by all parties hereto.
SECTION 10.7 Assignment/Binding Effect. Neither this Agreement, nor
any right hereunder, may be assigned by any of the parties hereto without the
prior written consent of the other parties. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.
SECTION 10.8 Parties in Interest. Nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Nothing in this Agreement shall be construed to create any rights or
obligations except among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.
SECTION 10.9 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with
and governed by the internal laws of the Commonwealth of Kentucky without
giving effect to the conflict of law principles thereof.
SECTION 10.10 Arbitration. Any dispute or difference between the
parties hereto arising out of or relating to this Agreement shall be finally
settled by arbitration in accordance with the Commercial Rules of the
American Arbitration Association by a panel of three qualified arbitrators.
The Seller and the Buyer shall each choose an arbitrator and the third shall
be chosen by the two so chosen. If either the Seller or the Buyer fails to
choose an arbitrator within 30 days after notice of commencement of
arbitration or if the two arbitrators fail to choose a third arbitrator
within 30 days after their appointment, the American Arbitration Association
shall, upon the request of any party to the dispute or difference, appoint
the arbitrator or arbitrators to constitute or complete the panel as the case
may be. Arbitration proceedings hereunder may be initiated by either the
Seller or the Buyer making a written request to the American Arbitration
Association, together with any appropriate filing fee, at the office of the
American Arbitration Association in Louisville, Kentucky. All arbitration
proceedings shall be held in Louisville, Kentucky. Any order or
determination of the arbitral tribunal shall be final and binding upon the
parties to the arbitration and may be entered in any court having
jurisdiction.
SECTION 10.11 Severability. In the event that any arbitral tribunal of
competent jurisdiction shall finally determine that any provision, or any
portion thereof, contained in this Agreement shall be void or unenforceable
in any respect, then such provision shall be deemed limited to the extent
that such arbitral tribunal determines it enforceable, and as so limited
shall remain in full force and effect. In the event that such arbitral
tribunal shall determine any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
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SECTION 10.12 Interpretation. The parties hereto acknowledge and agree
that: (i) the rule of construction to the effect that any ambiguities are
resolved against the drafting party shall not be employed in the
interpretation of this Agreement, and (ii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto and not in favor
of or against any party, regardless of which party was generally responsible
for the preparation of this Agreement.
SECTION 10.13 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only
and shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 10.14 Reliance. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any
other party to this Agreement, the party having such right to investigate
shall have the right to rely fully upon the representations and warranties of
the other party expressly contained herein.
SECTION 10.15 Expenses. Each party shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others
engaged by such party) incurred in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 10.16 Gender. All pronouns and any variation thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as
the identity of the person or entity or the context may require.
SECTION 10.17 Publicity. Except by the mutual agreement between the
Seller and the Buyer, no party shall issue any press release or otherwise
make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement except as may be required by law.
SECTION 10.18 Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the Buyer and the Seller have each caused this
Agreement to be executed by its duly authorized officer all as of the day and
year first above written.
Buyer: TD WINDOWS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx, Secretary
Seller: ALLHOM EAGLE WINDOWS & DOORS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx, President
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